Nobody saw that coming: Huge upside....>

US TSY FLOWS: Nobody saw that coming: Huge upside gain in May employment: +2.5M

vs. -7.5m estimate, or at best -- not so soon! 10YY climbed to 0.9555%, 30YY

tapped 1.7593%; June S&P futures climbed to 3210.5 high.

- Rate futures cratered following the totally unexpected NFP +2.5M vs. -7.5M

est! (Bbg survey breakdown for NFP yesterday: of the 75 respondents, the highest

est was -800k). Obviously better selling across the curve on heavy volumes w/

stops triggered on the way, bank portfolio and real$ buying intermediates to

long end, prop acct buying on the follow. Moderate late session buying and

unwinds of tactical steepeners noted.

- Still weaker but off initial post data lows (volumes doubled to near 1M Sep

10Y futures in the minutes after the data have receded) TYU added only 200k over

an hour as mkts mulled unexpected jump in jobs data. Futures traded sideways

with a gradual late session bid, while yld curves extended new 3+ year highs -

scaled back a little late.

- The 2-Yr yield is up 2bps at 0.2141%, 5-Yr is up 6.6bps at 0.4742%, 10-Yr is

up 8bps at 0.9035%, and 30-Yr is up 4.3bps at 1.6748%.